“Publish or perish” is academia’s mandate. “Collaborate or perish” might be law’s equivalent. Why? Technological advances, global markets-and labor pools, and post-financial crisis fiscal constraints have accelerated disaggregation in legal services. Not long ago, law firms handled all aspects of a matter. Now, there is a supply chain. Integrating suppliers in an efficient, cost-effective, and risk mitigating manner is the challenge– and opportunity. Clever buyers and suppliers of legal services collaborate to achieve efficiency, cost reduction, scalability, risk mitigation, and compressed timeframes for completing tasks and concluding matters.
Here are some recent examples:
- Allen & Overy and Deloitte: The law firm and professional services powerhouse have joined forces to help major banks address new regulatory requirements that will come into effect for over-the-counter (OTC) derivatives. The current OTC market is $500trillion (that is not a misprint).
A&O will deploy MarginMatrix, its new proprietary digital derivatives compliance system, and handle legal work. Deloitte will provide a disciplined, process-driven approach to the product, managing and resourcing client outreach. The collaboration aims to produce significant cost savings and help clients to achieve regulatory compliance.
This is the first major collaboration between an international legal practice and one of the Big Four members.
- Ashurst and Axiom: The law firm and Axiom, a staffing company-turned tech service provider, also announced a partnering arrangement in response to the forthcoming changes in margin rules and derivatives requirements. Axiom will support banks on the IT and renegotiation functions while Ashurst will provide legal advice on writing new rules and executing new agreements.
The collaboration is significant because it is Axiom’s first partnership with a law firm (the provider has heretofore positioned itself as “the anti-law firm”). It is also noteworthy because it follows A&O’s collaboration with Deloitte and is additional evidence that collaboration is fast becoming a norm if not a mandate.
- Deloitte and Kira Systems: Deloitte has partnered with Candian-based Kira Systems to apply artificial intelligence (AI) to legal delivery. Deloitte had used Kira’s platform internally and liked it so much they decided to partner with Kira. This will enable Deloitte to conduct due diligence and other document-centric tasks far more efficiently and cost effectively for clients.
This pairing is noteworthy because it involves the deployment of AI in legal delivery and marks another step by Deloitte into legal services. Earlier this month, Clifford Chance and Kira announced a similar partnering agreement, another instance of AI being harnessed to tackle select “legal” tasks.
- DLA and Lawyers on Demand (LOD): DLA, one of the world’s largest law firms, has forged a partnership with LOD, a UK based legal staffing company. DLA became the first major law firm to formally partner with a staffing company, tapping into the 500 plus attorneys of LOD, most of whom are alumni/ae of large firms. The objective is to integrate LOD’s “agile” attorneys billed at significantly lower price points than DLA for commensurate tasks. The early results of the collaboration have been so favorable that the two providers announced the expansion of the partnering arrangement into Asia. And it’s a safe bet that the US market may soon be next up.
This collaboration is noteworthy for several reasons: (1) one of the world’s largest law firms (by headcount, revenue, and offices) acknowledges that it can no longer be competitive operating as a “big-box store;” (2) the traditional law firm structure cannot compete with corporatized service providers on price (and, many would argue, IT and process expertise); (3) the legal market needs junior lawyers but not at the prices charged by large law firms; and (4) lawyers are increasingly working from legal providers other than law firms.
What Does Collaboration Mean?
Collaboration is a sign of a maturing— changing—legal services industry. Buyers not only expect more “bang for the buck” but also expertise that fits the task. That expertise can be broken down into: (1) legal; (2) IT; and (3) process. Law firms remain competitive at the high-end of legal expertise, but not so at the more junior levels. That’s where the agile providers come in (DLA and LOD). And with regard to technology and process, law firms tend to lag; that explains why the smart ones are partnering with providers and so meld IT and process expertise with the firms’ differentiated legal capability.
Collaboration is part of a strategy for law firms to recast themselves. They must first decide upon their areas of differentiated legal expertise and then collaborate with providers that offer specialized IT and process skills to complement it. Likewise, service company collaboration with law firms can benefit clients as well as the partnering providers.
It remains to be seen whether law firms or service providers become “the straw that stirs the drink,” the integrators of legal delivery. My bet is on multidisciplinary professional service providers, especially the Big Four. But no matter who emerges as the big dog in the space, some form of collaboration will persist. So it’s a good time for all providers—and consumers—to be taking a hard look at collaborative opportunities.